MARKETING STRATEGY OF - DiVA Portal
MARKETING STRATEGY OFTHE SUPERMARKETS[ICA MAXI, FORUM COOP, NETTO, LIDL]Rafael Lucena MatamalasMiguel Santandreu RamosMay 2009
Marketing Strategy of the supermarketsINDEXI. Introduction. 4II. Theory . 61.Marketing Mix . 6A.Product . 7B.Price . 7C.Place (or Distribution) . 7D.Promotion . 82.Merchandising . 9A.Advertisings (displays and posters) . 10B.Shelves. 11C.Product placement . 13D.Using music, lighting and visual effects. 13III. Methodology . 151.Method . 152.Research type . 163.Population and sample. 17A.Lidl . 18B.Netto . 18C.ICA AB . 19D.Coop Forum . 194.Instrument of collecting data . 20 Guideline . 22IV Empirical Study. 231.Coop Forum . 23A.About advertising . 23B.About background music . 24C.About lighting . 24D.About establishment’s organization . 24E.Other strategies. 252.MAXI . 26A.About advertising . 26B.About background music . 262
Marketing Strategy of the supermarketsC.About lighting . 26D.About establishment’s organization . 26E.Other strategies. 273.Lidl . 28A.About advertising . 28B.About background music . 28C.About lighting . 28D.About establishment’s organization . 284.Netto . 29A.About advertising . 29B.About background music . 29C.About lighting . 29D.About establishment’s organization . 29V. Analysis of empirical data . 301.Advertising . 302.Shelves. 313.Product placement . 334.Music . 345.Lighting . 356.Visual Effect: Colours. 367.Other strategies. 37VI. Conclusions . 391.Strategies conclusion . 392.General Conclusions . 40VII. References . 413
Marketing Strategy of the supermarketsI. IntroductionSupermarkets and Hypermarkets, since they appeared, haveplayed an important role in food distribution. This distribution model was widelyaccepted by both companies and consumers. The evolution of these stores inrecent years has been quite dynamic on the basis of their good combination ofsupply, proximity and service. Supermarkets and hypermarkets are increasinglyvalued by consumers, compared to other commercial formats, which triggersthe gradual disappearance of traditional markets.All the persons have different needs, and they want to satisfy theseneeds. Maslow (1943)1 formulates a hierarchy of human needs and he defendsthat when the person satisfies their basics needs, they develop higher needsand wishes. Among these needs, it founds a food needs, and it is here wherethe importance of the supermarkets and hypermarkets is important.These stores satisfy the food need of human beings, so their targetaudience ranges all the population. It is a highly competitive market. In thesemodern times the different chains use all kind of strategies to increase theirsales, becoming the sales process almost a science. That is because in theprocess of merchandising are involved studies of psychology, science andbusiness, which seek to know the tastes, habits, needs and way of thinking ofconsumers (Mártinez, 1997)2. For this reason and in these times of ruthlesscompetition is an excellent idea to have tools like “merchandising”, to try to gainadvantage against the other competitors.A whole theory has been developing about this topic. The base of thetheory is “promotion” (tool of “marketing mix”) and is focused in the POS (pointof-sale) merchandising. It has several tools to carry out its aim, but in thisresearch will analyse tools that the consumers can find in the supermarkets.These are, advertising on the point of sales, through posters and displays; howthe shelves are distributions on the establishment and also the product on them;1Abraham Maslow (1943), A theory of human Motivation, Chapter 8 [accessed 21.05.09]Matías Martinez Ferreira (1997), Merchandising, from andising/merchandising.shtml [accessed 02.02.09]24
Marketing Strategy of the supermarketsthe different use of music, lighting and colours on the establishment. These arewhich the report starts, but perhaps during the collected data, it can find morestrategies that the report does not bear in mind. In this case, these will also beanalyse and later commented.The purpose of the thesis is getting a better comprehension of thestrategies that super and hypermarkets use to attract attention of consumersand to increase their sales. To achieve that goal, different techniquesimplemented by stores are analysed. Other objective of this research is todiscover if supermarkets and hypermarkets apply these strategies in the sameways, which are their differences and similarities. The research question of thisthesis is: How are marketing strategies applied by Supermarkets andHypermarkets inside their establishments?DefinitionsSupermarket is a self-service store offering a wide variety of food andhousehold merchandise, organized into departments. It is larger in size and hasa wider selection than a traditional grocery store and it is smaller than ahypermarket or superstore3.Hypermarket is a superstore which combines a supermarket and a departmentstore (where usually are sold products like apparel, furniture, appliances,electronics, and additionally select other lines of products such as paint,hardware, toiletries, cosmetics, photographic equipment, jewellery, toys, andsporting goods), being the result a very large retail facility which carries anenormous range of products under one roof, including full lines of groceries andgeneral merchandise4.3Definition of Supermarket, from website http://en.wikipedia.org/wiki/Supermarket#cite note-0[accessed 02.02.09]4Definition of Hypermarket, from website http://en.wikipedia.org/wiki/Hypermarket [accessed02.02.09]5
Marketing Strategy of the supermarketsII. TheoryThe research uses the theory of “marketing mix” and merchandising’stheory.1. Marketing MixAccording to Doyle (2002)5, the “marketing mix” is the central task ofmarketing professionals. The set of marketing tools -product, price, promotionand place- is used by companies to achieve their objectives. As M.J. Baker(2003)6 states, the marketing mix is the only way to maximize customer’ssatisfaction and it results in higher salesand market share.To understand marketing mix isnecessarytounderstanditstools.“These 4-Ps –Product, Price, Promotionand Place-, are the four key mpetition”(Jobber,Figure1. Relation between 4Ps and 4Cs ofLauterborn. Source: Michael J. Baker (2003) themarketing book, Chapter 11, p.288.or exceed2001,thanthep.13)7.According to Lauterborn (1990)8, eachelement of the marketing mix is designedto meet a customer’s need. He assumedthis being aware of the importance of the four Cs –Costumer solution, Customercost, Communication and Convenience. The figure 1 shows this relationshipbetween four Ps and four Cs.5Peter Doyle (2002) Marketing Management and Strategy, Chapter 3, p.88 [accessed 22.02.09]Michael J. Baker (2003) The Marketing Book, Chapter 11, p.287 [accessed 21.02.09]7David Jobber (2001) Principles & Practice of Marketing, Chapter 1, p.13 [accessed 22.02.09]8Lauterborn, R. (1990) New Marketing Litany: C-Words take Over, Advertising age. [accessed 21.02.09]66
Marketing Strategy of the supermarketsA. ProductAccording to Jobber (2001) 9, the product decision involves what goods orservices should be offered to different groups of customers. As Fifield (1998)10states, the product policy is undoubtedly the most important element of themarketing mix. The product is the vehicle used by companies to satisfyconsumers’ needs and it should be always to orientated to consumer.B. PriceAs Jobber (2001)11 says, the price is a key element of marketing mixbecause it represents on a unit basis what the company receives for the productor service which is being marketed. In other words, price represents revenuewhile the other elements are cost.Often an organization is willing to spend a hundred thousand dollars onresearching its new product concepts, but it is loathed to spend one per cent ofthat on researching the different customer perceptions to various price levels(Fifield, 1998)12.C. Place (or Distribution)In accordance with Jobber (2001)13, “place” involves decisions concerningthe distribution channels to be used and their management, the location ofoutlets, methods of transportation and inventory levels to be held.Manufactures are concerned with how to distribute and deliver product tocustomers, and service providers are concerned with the location of servicepoints and customer accessibility (Fifield, 1998)14. To sum up: “Distribution and9David Jobber (2001) Principles & Practice of Marketing, Chapter 1, p.13 [accessed 21.02.09]Paul Fifield (1998) Marketing Strategy, Chapter 9, p.222 [accessed 22.02.09]11David Jobber (2001) Marketing& Practice of Marketing, Chapter 1, p.15 [accessed 21.02.09]12Paul Fifield (1998) Marketing Strategy, Chapter 10, p.234 [accessed 22.02.09]13David Jobber (2001) Marketing& Practice of Marketing, Chapter 1, p.15 [accessed 21.02.09]14Paul Fifield (1998) Marketing Strategy, Chapter 10, p.254 [accessed 21.02.09]107
Marketing Strategy of the supermarketsplace” answers the question: “Where would our customers expect to find ourproducts or services?”D. PromotionWith reference to Paul Fifield (1998)15, “promotion” is defined as thewhole array of methods and procedures by which the organizationcommunicates with its target market. Promotion is the element of marketing mixused to inform, persuade and remind to the target audience the capability of thecompany to satisfy their needs, and they use it willing to influence audience’sfeelings, beliefs and behaviour.“Promotion” uses different tools to achieve its purpose. The next figure(figure2)16 shows these tools, which are Advertising, Publicity Direct marketingSponsorship, Exhibitions, Packaging, POS (point-of-sale) merchandising, SalesPromotion and Personal Selling.Figure2. The promotional mix. Source: Keith Crosier (2003) The Marketing Book, Chapter 17, p.4201516Paul Fifield (1998) Marketing Strategy, Chapter 10, p.245 [accessed 22.02.09]Keith Crosier (2003) The Marketing Book, Chapter 17, p 419-420 [accessed 22.02.09]8
Marketing Strategy of the supermarkets2. MerchandisingThe research focuses on POS Merchandising, to be more exactly, onMerchandising in the supermarkets.According to Crosier (2003)17, POS merchandising is promotion viavarious forms of displays, acting as a reminder to consumer of previouslynoticed promotional message. Following the same idea, the AmericanMarketing Association (2007)18 asserts in its dictionary that Merchandising hastwo definitions; the first definition emphasizes the promotional activities appliedinside stores, like displays for their products, and the second one focuses onidentifying and choosing correct decisions about products or products portfolio.Some researches verify that the sales process mostly consist ofcommunication visual process, where the vision represents 80% of the humanperception, and the hearing is the 10% and the other senses as touch, smelland taste represent the remaining 10%19. This means that the visual effect iscrucial to sales, as customers’ participation in the buying process.Merchandising includes all activities in sales outlet which aims to reaffirm orchange the buying behaviour for the benefit of the company, so merchandisingas a concept is composed of the quality, assortment (brand and product mix),styling and fashion of products and pricing20.Supermarkets are in a highly competitive market, and they need to makedifferent strategies of merchandising for achieving loyalty of consumers andgetting new consumers.One study made by In-Store Media (a company specialized in sellingadvertising spaces at the point of sale)21 about the habits of consumers,indicates that seventy percent of purchasing decisions are made during17Keith Crosier (2003) The Marketing Book, Chapter 17, p 419-420 [accessed 22.02.09]American Marketing Association (2007) Definition of Merchandising, px [accessed 19.02.09]19Matías Martínez Ferreira (Caracas) Merchandising ising/merchandising.shtml [accessed 20.02.09]20David J. Newlands & Mark J. Hooper (2009) The global business handbook: The eight dimensions ofinternational management, Chapter 18, p.293 [accessed 06.05.09]21In-Store Media, from http://www.in-storemedia.com/ [accessed 19.02.09]189
Marketing Strategy of the supermarketsshopping (Diorio, 2007)22. Hence the sales outlet becomes very important,because it may change the consumers’ behaviour and their habits ofpurchasing.The supermarkets use different tools to lead consumers in theirpurchasing23. These tools can act individual or with each other, and every storechooses the most suitable tools to achieve its purpose.A. Advertisings (displays and posters)In this research, “advertising” is defined as the use of posters anddisplays inside super and hypermarkets, excluding advertising made outside thestore, like advertising on TV, magazines and newspapers. According to Zorita(2008)24 the best method to rise sales is using advertising and promotion tools.Is in the sales outlet where the battle can be won of the decision-making finalconsumer. He talks of the importance of the promotions supported by displaysand posters.Displays are defined as those features or promotional activities at point ofsale that show the product and make aware customers of their existence, suchas cards, exhibitions and other instruments to induce the purchase25. AsNewlands and Hooper (2009)26 explain, merchandising display factor tends tofocus on in-stores location and the shopping route to positively affectconsumers’ propensity to browse. In addition, attitudes towards visual productpresentation influence purchasing behaviour in the store. A positive attitude22Gabriel Diorio (management of In-Store Media),(2007), article about La comunicación en el punto deventa: un medio directo, rentable y novedoso. NTA.PDF [accessed19.02.09]23Finanzas.com (2003) article: ¿Qué técnicas se utilizan para hacernos comprar algo que nonecesitamos? from http://www.finanzas.com/noticias/finanzas.php?id 3372429 [accessed 19.02.09]24Enrique Zorita (2008) Las promociones en el punto de ventas, NTA.PDF [accessed20.02.09]25Terminología publicitaria from aria.html [accessed20.02.09]26David Newlands and Mark Hooper (2009), the global business handbook: The eight dimensions ofinternational management. Chapter 18, p.300 [accessed 10.05.09]10
Marketing Strategy of the supermarketsleads to more browsing and purchasing, whereas a negative attitude towardsthe visual product presentation results in an immediate exit from the store(Kerfoot, ateshoppers’merchandise selection (Khakimdjanovaa & Park, 2005)28. POS (point-of-sale)displays can be either gondolas, straight and circular racks, or cut cases whichare useful for showing the merchandise properly (Newlands & Hooper, 2009)29.Posters are those paper sheets, sketches or other items that can beplaced in malls, stores or on the streets and which purpose is to inform orannounce some matters, some particular products or services.Regarding to malls, stores or super/hypermarkets, posters can have twodifferent functions. On the one hand they can promote the sale of productsoffered there, for instance “sales” or discounted products. On the other handthey guide customers through the establishment using indicating posters ofdifferent sections, or in the case of super/hypermarkets, the different zoneswhere the different kinds of products are placed (Florencia, 2009)30.B. Shelves“Shelves" strategy is focused on the collocation of products on theshelves (how supermarkets put or organize them) . In relation to Hita (1997)31,shelves of supermarkets have three levels where products are placed; eyes,hands and feet.27Kerfoot, Davies & Ward (2003), Visual merchandising and the creation of discernible retail brands’.International journal of retail and distribution management .[accessed 10.05.09]28Khakimdjanovaa & Park (2005), Online visual merchandising practise of apparel e-Merchants’. Journalof retailing and consumer services 12 [accessed 10.05.09]29David Newlands and Mark Hooper (2009), the global business handbook: The eight dimensions ofinternational management. Chapter 18, p.300 [accessed 10.05.09]30Florencia (2009), Definición de cartel. Downloaded March, 30, 2009, from artel.php [accessed 10.05.09]31Elena Hita (1997), Trucos para “picar” en el supermercado, -06.html [accessed 19.02.09]11
Marketing Strategy of the supermarketsThe first level and the most important one is the eyes level, because theconsumer is able to see clearly the product. Super/hypermarkets use this levelto place the most expensive products which usually belong to the most wellknown brands. Manuel (2007)32 says in his article that the brands often paysupermarket because they want to place their products on this level.The second level is hands level. This level is also easily accessed by theconsumer. Here, the products are frequently cheaper than on the eyes level, butmore expensive than on the feet level. The brands are well-known as well.The third level is the feet level. On this level the cheaper products areplaced. Access is more difficult than to the other levels, and the consumer hasto do effort to take the product. The “private label brands” are frequently placedon this level. “Private label brands”( also called “private brands”) are thoseowned not by a manufacturer or producer but by a retailer or supplier who getsits goods made by a contract manufacturer under its own label33.Speaking about shelves in a horizontal line, the most expensive productsare placed in the beginning and in the end. In this way consumers who want tobuy inexpensive products have to walk two times in front of the expensive onesbeing tempted to buy them.Another characteristic feature of shelves is their beginning, also calledgondola (Martínez, 1997)34. Gondolas are parts of shelves situated in theirendings and placed next to main corridors. There are placed products thatmarketing managers want to sell easily. Products placed on gondolas notnecessarily have to belong to the same “family” of products placed on theirrespective shelves; for example, if products of the shelf are snacks, ongondolas can be placed drinks.32José Manuel (2007), article about: 10 trucos que utilizan las grandes superficies para que compres y 10trucos para defenderte, from s-y-10-trucos-para-defenderte/ [accessed ition/private-label.html34Matías Martínez Ferreira ,Monograph about Merchandising ising/merchandising.shtml [accessed 19.02.09]12
Marketing Strategy of the supermarketsC. Product placementThis strategy consists of organization of products using “cold-zones” and“hot-zones”.“Hot-zones” are those places where the flow of consumers is heavier; forexample, a cross between two hallways or near the entrance35. In these zones,products are easier sold because they are more visible for customers.In “cold-zones” sales are lower. These are generally transitional spaces,poorly illuminated or hidden36. In such areas are often placed essential productsas sugar or salt. These products are placed there because do not need to beboosted and customers will buy them anyway.D. Using music, lighting and visual effectsThese tools are always related with other tools supporting them. Baker(1992)37 and Morin (2007)38 state that music has been shown to affectconsumers’ responses to retail environments, typically in a positive manner.According to Fulberg (2003)39, music communicates to people’s heart and mindand serves as a powerful influence on emotions. In others words, music helpssupermarkets making customers’ visit more comfortable and pleasant.Sometimes music is imperceptible for consumers. They are not aware ofits “presence” while they are shopping. In that case music is working on asubconscious level.35Finanzas.com (2003) article: ¿Qué técnicas se utilizan para hacernos comprar algo que nonecesitamos? from http://www.finanzas.com/noticias/finanzas.php?id [accessed 20.02.09]36Finanzas.com (2003), ibid. [accessed 20.02.09]37Baker, J., Grewall, D. and Levy, M.(1992), “An Experimental Approach to Making Recall StoreEnvironmental Approach to Making Recall Store Environmental Decisions”, Journal of Retailing68(Winter), pp. 445-60 [accessed 22.02.09]38Morin, Dubé & Chebat (2007), “The Role of Pleasant Music in the Dual Model of EnvironmentalPerception”, Journal of Terailing 83(1), pp. 115-30 [accessed 22.02.09]39Fullberg, P (2003), “Using Sonic branding in the Retail Environment –An Easy and Effective way toCreate Consumer Brand Loyalty while Enhancing the In-Store Experience”, Inform Design,http://www.informedesign.umn.edu/Rs detail.aspx?rsId 1694. [accessed 19.02.09]13
Marketing Strategy of the supermarketsThe main aim of this strategy is to control human flow40, through differentkinds of music. Depending of the kind of music, flow can become slower orfaster. When the store is overcrowded the ideal is to use fast-paced musicwhich compels consumers to make purchases quickly and rashly. When theestablishment is less crowded the best option is slow music, encouragingcustomer to spend more time inside the store which rises the impulse buying.Regarding to the lighting, Quintana (2003)41 says that it is a veryimportant factor. It is used, for example, in the section of perishable foods toenhance the feeling of freshness. Supermarkets use the lighting to improve thepresentation of the products. As Newland and Hopper (2009)42 state, usingsuitable lighting to merchandise increases visibility and can make stores seemmore inviting. The use of fluorescent can improve sales of a specific zone, forexample, using fluorescent in the vegetables zone makes vegetables seemmore “fresh”.Markets use “visual effects” to attract attention of consumers to specificproducts. “Colour” is one of the visual effects. The language of colours has asignificant influence on the buying habits. As Newland and Hopper (2009)43 say,the colour affects moods and tends to manifest itself in the choices made. Foreach person, each colour means or represents something, but there are somecolours that have a similar meaning for everyone. White is a neutral colour; redand orange encourage to eat, being mostly used in the meat section; bluesuggests freshness and coldness and is used in the seafood zone; and thegreen reminds “nature” and it is generally used in the section of vegetable andfruits44.40Finanzas.com (2003) article: ¿Qué técnicas se utilizan para hacernos comprar algo que nonecesitamos? from http://www.finanzas.com/noticias/finanzas.php?id 3372429 [accessed 19.02.09]41Yolanda Quintana (2003), she is from Spanish Confederation of Organizations of housewives,consumers and users. From http://www.finanzas.com/noticias/finanzas.php?id 3372429 [accessed21.02.09]42David Newlands and Mark Hooper (2009), the global business handbook: The eight dimensions ofinternational management. Chapter 18, p.299 [accessed 06.05.09]43David Newlands and Mark Hooper (2009), the global business handbook: The eight dimensions ofinternational management. Chapter 18, p.299 [accessed
Marketing Strategy of the supermarkets 6 II. Theory The research uses the theory of “marketing mix” and merchandising’s theory. 1. Marketing Mix According to Doyle (2002) 5, the “marketing mix” is the central task of marketing professionals. The set of
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